What is an Accredited Investor?
An accredited investor is a term developed by the SEC. More than a definition, it is a criteria. An accredited investor is a person or entity that is allowed to invest in private securities. Private Securities are not registered with the Securities and Exchange Commission (SEC). These private securities, typically referred to as a private offering, are outlined in a private placement memorandum.
To be an accredited investor, an individual or entity must meet certain income and net worth guidelines. Here are the most common that would apply to an individual investor:
- Annual income is $200,000 for an individual or $300,000 for a household.
- Any natural person whose individual net worth is $1,000,000 or more (excluding their primary residence).
Those are the two most common methods of qualifying as an accredited investor for the common everyday investor. There are many other ways to qualify as an accredited investor if you do not meet either of those criteria. You can find more information from the governments website by clicking here eCFR :: 17 CFR 230.501 -- Definitions and terms used in Regulation D.
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